Does quantity demanded refer to all consumers or individual consumers?

Question

When looking at points along the demand curve, is each quantity corresponding with each point referring to the total quantity demanded by all consumers in a market or the quantity demanded by individual consumers?

I am looking at the market supply and demand graph and the graph for each individual firm in perfect competition (the horizontal demand).

Answer 1

Each point is the summation of all individual demands of all consumers in the market at that price.

Suppose you only have two consumers, A and B.

• At price $1, A demands 2 units and B demands 3 units.

• For the market demand curve at price $1 you would have quantity demanded 5 units. (2 + 3 as there are only two consumers in the market).

So the market demand curves ends up being the horizontal summation of each individuals quantity demanded at a certain price (You sum quantity demand which is on the x-axis at each price hence horizontal summation)

On average, as price increases quantity demand decreases in the market. This is known as the law of demand. This may not be true for each individual consumer however, it is usually true for the market.

There are certain exceptions to the law of demand:

• Veblen goods. These are luxury goods that become more desirable as their price increases.
• Giffen goods. These are inferior goods that are usually a diet staple e.g. wheat, rice. If there price goes up people cut on luxury goods to consume more of these i.e. Irish Famine.

Answer 2

If it’s a “market demand curve,” that means the quantity demanded is that of the entire market. If it’s an “individual demand curve,” it’s the quantity demanded of an individual consumer. If you open an Econ 101 textbook and look at the supply–demand equilibrium diagram, they’re generally talking about market demand and supply curves.